Savings Bank Regroups

Virginia Beach Federal Savings Bank stockholders approved the reorganization of the bank into a holding company form of ownership at their annual stockholders meeting this week.

If the Federal Home Loan Bank Board approves the reorganization this summer as expected, the savings bank will become a wholly owned subsidiary of a newly formed holding company called Golden East Financial Corp.

"For all practical purposes, the move doesn't change the stockholders' interest in Virginia Beach Federal," said Tim Miller, bank executive vice president and chief financial officer. "But from a business standpoint, it gives us greater flexibility in operations and lets the bank diversify into other financial business activities."

Miller said last month that the savings bank was looking to expand into downtown Norfolk, Newport News and Williamsburg.

Once the bank is reorganized, the corporation will be in a position to "take immediate advantage of any acquisition opportunities that may arise," Miller said.

Although Virginia Beach Federal officials approached Newport News Savings Bank last summer about a possible buyout, Miller said "no specific acquisitions are planned at this time."

Under current federal regulations, if the bank purchased another savings bank, the institution would have to merge with Virginia Beach Federal and lose its own identity, Miller said. If the Golden East Financial Corp. holding company buys other banks, they can keep their own charters and their own names.

Also, the Federal Home Loan Bank Board narrowly restricts the type of businesses that a savings bank can own. A holding company has a much broader range of what it can own, Miller said. And a holding company that diversifies its holdings is not restricted to the amount of dividends it can pay its stockholders, Miller said.

When the reorganization is final, each outstanding share of Virginia Beach Federal common stock will be converted into one share of Golden East Financial Corp. common stock.